Till Time's Last Sand by David Kynaston

Author:David Kynaston
Language: eng
Format: epub
ISBN: 9781408868584
Publisher: Bloomsbury Publishing
Published: 2017-07-27T11:43:12+00:00

After Labour had narrowly won the election – a narrowness prompting the Bank’s George Preston to reassure the Fed on the afternoon of 16 October that ‘no sweeping changes might be expected’ – the new government’s first and most cardinal decision was not to devalue, notwithstanding the increasingly serious balance of payments situation and accompanying pressure on sterling. After all, Labour did not want to be seen, following 1949, as the party of devaluation. It was, Wilson told President Lyndon Johnson soon afterwards, a decision made not only for ‘now’ but ‘for all time’. Even so, relations between the Labour government and the Bank were seldom easy almost from the start, with Cromer later in October expressing his displeasure to the new chancellor, James Callaghan, after the foreign secretary had unilaterally told Washington that there would be no raising of Bank rate in the near future. The clearest sign of trouble ahead came on 3 November. That day, the government announced its intention to abolish prescription charges and increase pensions; that evening, at the annual Mansion House bankers’ dinner, Callaghan urged the City to ‘harmonise’ its ‘interests’ with ‘the needs of the nation as a whole’, as part of a ‘joint effort to create a fairer, a more productive and more progressive society’; while at the same dinner the governor set out a rather different stall: ‘I am convinced that the future prosperity of this country at home and its power in the world abroad depends above all on the strength of the pound, and the strength of the pound depends today, as it always has, on wise and prudent husbandry of our resources so that they may grow and fructify.’ And accordingly: ‘We must reduce expenditure in this country which distracts resources from contributing to the top priority of closing the payments gap.’11

A week later on 11 November, Callaghan’s emergency budget – immediately viewed by international financial opinion as inadequate – led to as dramatic a fortnight in Bank/government relations as anything since 1931 and arguably even since the days of Cunliffe. On Friday the 13th, with sterling under severe pressure and the Bank’s reserves losses starting to run at their highest since 1961, Cromer strongly urged Callaghan to raise Bank rate from 5 to 6 per cent in order to ‘mitigate the danger of a further serious fall in confidence’; on the 16th, Wilson publicly declared his unshakeable determination to keep the pound ‘riding high’, an apparent signal to the markets that the rate would rise on Thursday the 19th; but that Wednesday evening, after telling Cromer to his face that ‘the present difficulties’ were due to ‘the deflationary prejudices’ of central bankers, Wilson overrode Callaghan and refused to sanction the rise (partly because of anxiety about American reaction). ‘£ under immense pressure,’ noted Bolton on Friday the 20th. ‘Roly trying to educate Wilson & Co about life.’ Indeed the governor was, writing that day to Callaghan in the strongest possible terms:

The situation of sterling is deteriorating disturbingly

Download

Copyright Disclaimer:
This site does not store any files on its server. We only index and link to content provided by other sites. Please contact the content providers to delete copyright contents if any and email us, we'll remove relevant links or contents immediately.